How to Clean Up Your Credit Report

Mortgage lenders are not likely to offer you a loan with a poor credit history. When you’re buying a house, unless you’re buying it all with cash, you need a mortgage loan.

And your credit score plays a major role, not only to get you qualified for a loan but also to get the best interest rate on a loan. Therefore, it’s crucial to make sure that you credit report is as clean as possible and free of errors.

Note that even if you don’t need your credit score right away, it’s important to clean up your credit report in advance, because some things take time to be sorted out. Follow these tips if you need help with credit repair.

Here’s how to clear up a credit report:

Related articles on how to clean up your credit report:

• How to Raise Your Credit Score to 850
• What is a Good Credit Score
• How to Check Your Credit Report for Free

1. Get a copy of your credit report.

Before you start fixing your credit, you need to order a credit report.

By law, you are entitled a free credit report from the 3 credit bureaus (Experian, Equifax, Transunion). You can get these reports at AnnualCreditReport.com. However, you can only request these reports once a year.

But with Credit Repair, you get unlimited credit reports.

2. Review your credit report thoroughly.

Once you get a copy of your free credit report, review it thoroughly for any errors. First, review your identification information to make sure there are no clerical errors.

That includes your name, address, social security number, etc. If there is wrong address or a wrong social security number in your report, you should immediately fix it. 

So make sure, everything listed in your report is accurate.

3. Make a list of negative information.

Make a list of the things you find inaccurate. This will give you an idea of what you need in order to fix your credit. Also, some credit reports will tell you some of the things that are negatively affecting your credit score. For the credit reports that don’t say, here are some of things to look for:

a) Past due accounts.

One of the first thing to look for in your credit report is to make sure you don’t have any past due accounts. This is extremely important. Payment history accounts for 35 percent of your FICO score, which is the largest impact on your credit score.

Late payments will negatively impact your credit score more than anything else. Therefore, if there are any past due accounts, negotiate with creditors or debt collectors to pay them off quickly. So making your accounts current is the fastest way to clean your credit.

b) Collections.

Just as past due accounts hurt your credit score, items in collections also negatively impact your score. Past due accounts are usually 30 to 60 days late. But accounts that are 90 days late are considered to be delinquent and in collections. So work with debt collectors to remove collection accounts from your credit report.

c) Student loan default.

If you went to undergraduate school or graduate school, chances are you have student loans. And just as any other loans, you can default on your student loan if you don’t make on time payments. Student loan default is not permanent.

You can always negotiate with your provider to make your student loan current. This will require you to make several months of timely payments before your student loan can be considered current. 

d) High credit utilization rate.

Besides payment history, high credit card utilization rate has the second highest largest impact on your credit score.

Your credit utilization rate is the amount of credit you’re currently using divided by the total amount of credit available.

For example, if you have $5,000 in credit available, and you have a balance of $2500, then your credit utilization rate is 50%. That means you are using half of the total credit you have available.

A good rule of thumb is to keep your credit utilization rate below 30%. For example, if your total credit limit is $5,000, your total balance should’t exceed $1500.

So in order to fix your credit report fast, try to bring your utilization rate below 30 percent.

4. File a dispute online.

File a dispute online to have all the negative information on your credit report removed.

Here is the contact information for the 3 credit bureaus:

• Equifax: 800-685-1111; www.equifax.com
• Experian: 888-397-3742; www.experian.com
• Transunion: 800-916-8800; www.transunion.com

Related articles on how to clean up your credit report:

• How to Raise Your Credit Score to 850
• What is a Good Credit Score
• How to Check Your Credit Report for Free

Working With The Right Financial Advisor.

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.